Employer’s Subsidiary Liability for Employee Crimes: The Calang Ruling

When an employee commits a crime in the course of work, the employer may worry about being held directly and fully liable for the damages. Philippine law, however, draws an important distinction: in criminal cases, an employer’s liability is generally subsidiary, not joint and several. This means the employer pays only if the employee cannot.

The Supreme Court’s ruling in Rolito Calang and Philtranco Service Enterprises, Inc. v. People of the Philippines clarified this principle. The case involved a Philtranco bus driver found guilty of reckless imprudence resulting in multiple homicide, physical injuries, and damage to property. The trial court initially held the driver and his employer jointly and severally liable for damages. The Supreme Court modified this ruling, setting out the exact scope of the employer’s responsibility.

The Core Issue: Joint and Several vs. Subsidiary Liability

The central question was whether Philtranco, as the employer, could be held jointly and severally liable for damages arising from its employee’s criminal negligence. The employer argued that since it was not a direct party to the criminal case, such liability should not attach. The Supreme Court agreed.

Joint and several liability means each party can be held independently liable for the full amount of damages. Subsidiary liability, by contrast, means the employer becomes liable only when the employee is insolvent or unable to satisfy the civil indemnity. In criminal cases, the Court reiterated, the employer’s liability is subsidiary.

Delict vs. Quasi-Delict: Two Different Legal Regimes

The Court distinguished between two sources of obligation:

• Delict (crime) — governed by the Revised Penal Code. Here, the employer’s liability is subsidiary.
• Quasi-delict (negligence) — governed by the Civil Code provisions on vicarious liability. Here, an employer may be held directly and solidarily liable for an employee’s negligent acts, but only if the employer failed to exercise the diligence of a good father of a family in the selection and supervision of its employees.

The Court emphasized that the Civil Code provisions on vicarious liability for quasi-delicts do not apply to civil liability arising from a crime. The two regimes are separate and must not be confused.

The Subsidiary Liability Rule Under the Revised Penal Code

The legal basis for subsidiary liability in criminal cases is found in the Revised Penal Code, which provides that the subsidiary liability of employers applies to employers, teachers, persons, and corporations engaged in any kind of industry for felonies committed by their servants, pupils, workmen, apprentices, or employees in the discharge of their duties.

This provision is deemed written into judgments even if the trial court does not expressly state it. In Calang, the Court held that Philtranco’s liability, if any, could only be subsidiary.

Conditions for Enforcing Subsidiary Liability

The Supreme Court set out four conditions that must be established before an employer can be held subsidiarily liable:

1. The defendant is indeed the employer of the convicted employee;
2. The employer is engaged in some kind of industry;
3. The crime was committed by the employee in the discharge of their duties; and
4. Execution against the employee has not been satisfied due to insolvency.

These conditions can be determined within the same criminal action, through a hearing with due notice to the employer. This ensures the employer has an opportunity to present evidence and defend itself before being held liable.

Practical Takeaways

• In criminal cases, an employer’s liability is subsidiary, not joint and several. The employer pays only if the employee cannot.
• Do not confuse delict with quasi-delict. Civil Code rules on vicarious liability apply only to negligence cases, not to crimes under the Revised Penal Code.
• Four conditions must be met before subsidiary liability attaches: employer status, engagement in industry, commission of the crime in the discharge of duties, and employee insolvency.
• Employers get due process. The court must conduct a hearing with notice before holding an employer subsidiarily liable.
• Prevention remains key. While subsidiary liability offers protection, employers should still implement rigorous hiring, training, and supervision practices to reduce the risk of employee negligence.

The Calang ruling provides essential clarity for employers navigating their responsibilities when an employee commits a crime. Understanding whether liability arises from delict or quasi-delict is critical in determining the nature and extent of the employer’s exposure.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.